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Citing low prices for its main competitor, warm winters, and environmental regulations, the state’s largest coal-fired power plant will shut down by July 1, the company that owns it said.

Homer City Generating Station, about 50 miles east of Pittsburgh in Indiana County, will go through “tiered layoffs” until then, William A. Wexler, CEO of Homer City Generation, L.P. said in a written statement. Last year, the company said it had 129 workers.

The announcement means all five of the state’s remaining coal plants are slated to be shut down or converted to natural gas by 2028. Coal-fired generation has continued its precipitous dropoff around the country – declining by 68% between 2010 and 2020.

“Homer City based its decision on several factors including the low price of natural gas, a dramatic spike in the cost of its ongoing coal supply, unseasonably warm winters and increasingly stringent environmental regulations,” the statement said.

Homer City said new emissions limits imposed by the U.S. Environmental Protection Agency to comply with federal Clean Air Act limits on nitrogen oxides set an “excessive economic and operational burden” for the plant.

It also cited “ongoing uncertainty” surrounding the state’s plan to join the Regional Greenhouse Gas Initiative (RGGI), a 12-state compact that sets a cap on greenhouse gases.

“RGGI will severely limit Homer City’s ability to plan long term and it will handcuff the business in making further investments with an uncertain regulatory future,” the statement said.

Under RGGI, power plants that produce carbon emissions, the main cause of global warming, must pay a fee for every ton of carbon they produce. The initiative is on hold, however, after a state court issued an injunction last year preventing the state from implementing it while a lawsuit works its way through the courts.

By participating in the program, the state projects it will avoid up to 225 million tons of carbon emissions by 2030. For comparison, the state produces about 293 million tons of CO2 per year. According to the EPA, Homer City produces around 3.5 million tons of CO2 per year.

“This is an unfortunate day for us at Homer City because we did everything possible to maintain our operations,” Wexler said. “Everyone at Homer City was committed to helping power our community and no one embodied that commitment more than our workers. We will continue to look to utilize all of Homer City’s hard assets, including its existing infrastructure, to find a higher and better use(s) to continue to support the community.”

Impact on labor

“It is not a victory when hundreds of in-house workers and thousands of subcontractors — a majority of whom are members of our labor council — will lose good union jobs,” said Darrin Kelly, president of the Allegheny-Fayette County Labor Council, in a statement. “We recognize the need to transition to cleaner energy, but we operate in reality. The reality is that far too many working people are being left behind in that transition.”

Shawn Steffee, business manager for Boilermakers Local No. 154, which provided some of the plant’s labor, said over 120 members of his union worked at the plant for 11 weeks during a planned outage last fall conducting maintenance.

He called the pending closure “absolutely devastating” to his union, which has 1,400 members.

Steffee blamed the closure on RGGI’s potential to tax carbon emissions at the plant.

“This is going to be a gut shot to labor and the boilermakers. There’s going to be job losses…You’re going to have a big tax revenue loss for the community and the (local) school district,” Steffee said. “Now that facility is gone and we have other ones in jeopardy.”

Homer City has been operating at lower capacity

First put into operation in 1969, the plant faced several years of difficulties. In 2017, it filed for bankruptcy. In 2021, the company laid off 43 workers. Last year, it said it would be producing less power, and Wexler said at the time the company could shift its focus to putting renewable energy on the grid.

The 1,900-megawatt plant has the capacity to power 2 million homes. But in recent years, the plant has been operating at a much lower capacity.

Rob Altenburg, senior director for energy and climate at PennFuture, said federal Energy Information Administration data he had analyzed showed the plant has been operating at between 17 and 25 percent total capacity the last three years.

Altenburg said that’s because coal is more expensive than its other main competitors in electric generation.

“These coal plants certainly want to be operating at 80, 90% capacity. That’s really what they were designed to do,” Altenburg said. “They were operating at much lower capacities.”

Altenburg said that’s likely a function of coal’s relatively high cost to create electricity. Generally, electricity is made by the lowest cost producer, and those with higher costs run less.

“What we have seen in practice is not that it is regulations or the environment leading to these plants underperforming. It’s that they’re just not competing in the market,” Altenburg said.

Impacts to the grid

The effect on the electric grid will be monitored by PJM, the regional transmission organization that coordinates the movement of wholesale electricity in all or parts of 13 states and the District of Columbia.

Jeff Shields, a PJM spokesman, said in an email the organization “has an established process by which we study the potential impact of a generator deactivation, whether the retirement will impact reliability of the system and what, if any, enhancements are needed on the electrical grid to preserve reliability.”

According to PJM, power plant owners sometimes decide to rescind their deactivation requests and keep a plant running.

This story is produced in partnership with StateImpact Pennsylvania, a collaboration among The Allegheny Front, WPSU, WITF and WHYY to cover the commonwealth's energy economy.